The fight for pay equality between men and women is grabbing headlines more than ever. But putting the situation right is about more than simply evening up the numbers, writes Erika Morphy.
By most measures, San Francisco-based Salesforce.com could be considered a progressive company. It put the software-as-a-service model on the industry map back in the days when no one could imagine running a company without an enterprise resource planning system. Its employees are encouraged to volunteer for charitable causes on company time. CEO Marc Benioff is a devotee of yoga and meditation.
And yet, when the company conducted an equal pay audit in 2015, it found that some women were being paid less than men for similar positions. Salesforce quickly acted, explaining its findings publicly and spending some $3m to even out the compensation.
Since then, a number of global companies have conducted similar audits. More significantly, a number of countries around the world have taken up the cause of gender pay equality in recent years. Iceland, for example, is working on a law that would require companies to demonstrate that they pay men and women the same salary for the same work. In Germany a new law will allow female employees to find out how much their male colleagues in similar positions earn, as well as the criteria and the procedure for determining the salary. In the UK, a new law will require employers with 250 or more employees to comply with new gender pay gap reporting regulations. Other countries have required some type of pay data for years: legislation along these lines can be found in Austria, Belgium, Denmark, Portugal and Sweden.
While the US lags behind many of these countries on a national level, the state of California is considering legislation that mimics some of the UK legislation’s requirements.
Such moves demonstrate that, despite some persistent arguments to the contrary, there is indeed a widespread issue when it comes to the gender pay equality gap. One of many studies, by US recruiter Glassdoor, reports: “The gender pay gap is real, both in the US and around the world. Men earn more than women on average in every country we examined, both before and after adding statistical controls for personal characteristics, job title, company, industry and other factors designed to make an apples-to-apples comparison between workers.”
But while the wave of global legislation appears to be good news – albeit long in coming – for the cause of gender equality, for multinationals these new rules put them in a bit of a fix. Compliance is easy enough, but how should they deal with the sensitive issues that can arise if transparency in one jurisdiction reveals to employees in another that they may indeed be underpaid? Or worse, as could happen in Germany, when an employee finds out her colleague who does the same work is paid more? The gender pay gap is believed to range somewhere between 7% and 22% in that country, according to analyst Orrick.
There is only one answer, says Daniel Puckey, a senior reward consultant in analyst Willis Towers Watson’s London office. “Inclusion, diversity, transparency: it all needs to be part of the broader day-to-day culture of a company no matter where its offices are,” he says.
There also needs to be buy in across all levels to ensure that cultural change is embedded in the organisation, according to Yong Jing Teow, a London-based economist at PwC. “Training is one approach. Our Open Mind training programme helps to address unconscious biases,” she says. Another is flexible working hours. PwC, according to Ms Yong, offers formal flexible working arrangements as well as “everyday flexibility to fit around people's lives as and when needed”.
The starting point for any company, in any country, is an internal compensation audit such that which Salesforce undertook. These, however, can be fraught with the potential for missteps, depending on how they are conducted. Some audits, for example, look at wage gaps within job titles, and others examine organisation-wide wage gaps, according to the US National Women’s Law Center. “Unfortunately, although several companies have announced that they have undertaken equal pay audits, very few have shared details regarding their methodology, making it difficult to assess the rigour and quality of their analyses,” it said in a March 2017 report. And only a few employers have acknowledged the existence of a wage gap or disclosed steps they have taken to correct any pay disparities, it added.
PwC is not a member of that group.
“One of our earliest initiatives was to report our gender pay gap beginning in 2014,” says Ms Yong. “We were one of a handful of organisations in the UK to do so at the time. We’ve also been communicating our diversity targets and data since 2012."
Ms Yong says PwC’s pay gap was the result of a lack of female representation at senior levels, “as women are more likely than men to take breaks midway through their careers for family or other reasons”.
One response by PwC has been its Back to Business programme that looks to attract professional women – and men – back into work following a career break, particularly at more senior levels. “The programme offers support to transition back, such as training and networking opportunities, with successful candidates being offered permanent positions,” says Ms Yong. The programme was implemented in 2015, expanded in 2016, and, according to Ms Yong, “has helped to improve the diversity of our leadership pipelines”.
Understanding the Gap
PwC’s discovery that there was a lack of women in senior positions is no anomaly. “The crux of the matter is that there are fewer women in more highly paid or senior jobs,” says Willis Towers Watson’s Mr Puckey.
And while there is a formulaic way of addressing this – PwC’s Back to Business programme is a textbook example – some companies are not content with merely putting in place such initiatives but are also digging into the ‘why’.
“I think more and more companies understand that the implications of a gender pay gap are not necessarily just about numbers but also about understanding what is driving that gender pay gap,” says Mr Puckey.
Even Salesforce realises it needs to better understand how it fell into unfair compensation patterns. “Moving forward, Salesforce plans to monitor and review salaries on an ongoing basis – making equal pay a part of our company’s DNA,” wrote Cindy Robbins, executive vice-president, global employee success, in a blog post when announcing the results of the pay audit.